Zhang v Misitano; Misitano v Zhang

Appearances

1. John Misitano, the tenant's father, appeared for Ms Victoria Misitano, in each proceeding.
2. Ms He, agent, appeared for the landlord, in each proceeding.
3. Each party took an oath or affirmation prior to giving evidence before the tribunal.

Jurisdiction

1. On the establishment date, 1 January 2014, the Civil and Administrative Legislation (Repeal and Amendment) Act 2013 amended certain statutes which previously conferred jurisdiction on now "abolished" tribunals. NCAT has jurisdiction to hear and determine relevant matters in place of the "abolished" tribunals.
2. From 1 January 2014, FTA, was amended. The definition of "Tribunal" was changed in that Act from the CTTT to NCAT - see cl 4.34 item [2] in Schedule 4 to the Civil and Administrative Legislation (Repeal and Amendment) Act.
3. The Tribunal is satisfied that NCAT has jurisdiction to hear an application founded upon the Residential Tenancies Act, 2010.

Procedure

1. Section 38 CAT Act, Procedure of Tribunal generally Section 38 (1) The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision. (2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. (3) ……. (4) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.
2. The Tribunal decided to deal with the bond claim prior to dealing with the tenant's compensation claim, notwithstanding that the bond claim was filed after the tenant filed its claim for compensation.
3. The Tribunal exercised its discretion and heard evidence in the bond claim first, despite Ms He's resistance to such an approach.

The service of evidence

1. Although there were orders made for the filing of separate evidence in each of the proceedings, neither party had adhered to those directions. The evidence for each matter, the bond claim and the compensation claim, was an amalgam of documents prepared and placed in a single folder of documents filed and served by each party as evidence in both proceedings.

The rent reduction claim

1. In the rent reduction claim, the applicant relies upon section 45 of the Act, to seek a reduction in rent where the premises are unusable or destroyed. For ease of reference, the Tribunal inserts the relevant provision of the Act: RESIDENTIAL TENANCIES ACT 2010 - SECT 45 Remedies for reduction of rent on frustration of residential tenancy agreement 45 Remedies for reduction of rent on frustration of residential tenancy agreement (1) The Tribunal may, on application by the landlord or tenant, make an order determining the amount of rent payable if the rent is abated under section 43 (2). (2) The Tribunal may order that: (a) from a specified day, the rent for the residential premises must not exceed a specified amount, and (b) the landlord must repay to the tenant any rent paid by the tenant since the specified day that is in excess of the specified amount. Note : The residential tenancy agreement may also be terminated in these circumstances (see section 109).
2. To make sense of the applicant's claim for rent reduction, the applicant refers to orders sought in its initial application, 19/12978, that was founded upon section 45 of the Act.
3. As a preliminary matter, the Tribunal notes that section 45 of the Act references section 43 (2) of the Act. The section provides for a rent abatement otherwise than for a breach.
4. If the tenant is to succeed on its section 45 application the Tribunal needs to make a finding that the premises are partially uninhabitable, and upon that finding being made, the applicant is entitled to a partial rent reduction.

Claim for rent reduction

1. The claim for rent reduction is set out in the body of the applicant tenant's evidence. The applicant relies upon a 50% rent reduction for a period of 11 weeks commencing on or about 8 February 2019 until the date of yielding up the premises on 26 April 2019. The amount claimed was expressed as 50% of the rent payable for that period, or $ 3,080.

No need for finding of breach in rent abatement claim

1. Section 43 (2) is referenced in section 45 of the Act. For ease of reference the relevant provisions of the section are set out below: RESIDENTIAL TENANCIES ACT 2010 - SECT 43 Rent reductions 43 Rent reductions (1) Reduction in goods, services or facilities The tenant may make a written request to the landlord at any time for a reduction in rent if the landlord reduces or withdraws any goods, services or facilities provided with the residential premises, even if those goods, services or facilities are provided under a separate or a previous contract, agreement or arrangement. (2) Premises unusable The rent payable under a residential tenancy agreement abates if residential premises under a residential tenancy agreement are: (a) otherwise than as a result of a breach of an agreement, destroyed or become wholly or partly uninhabitable, or
2. A claim may be made for a rent abatement: (a) otherwise than as a result of a breach of an agreement, [where the premises] are destroyed or become wholly or partly uninhabitable
3. For the tenant to succeed in reliance upon section 43 and 45, the Tribunal needs to make a finding that the premises were partially uninhabitable, though does not require the Tribunal to make a finding of a breach. If the applicant succeeds, then there is an award for partial rent abatement.
4. Throughout the hearing Ms He's protestations in the following terms, have no application in the abatement claim: how can the landlord be responsible for the loss other than where there is a finding that there is a breach by the landlord, for example, in terms of a failure to maintain and repair the premises.

The compensation for loss of goods - the contrasting provision

1. The applicant made a claim for loss of goods allegedly damaged because of the "flooding" event. The claim was for around $ 700 for loss of the following goods: 1. cube storage unit; 2. a tall boy; 3. leather boots; 4. lap top bag; and 5. pink duffel bag.
2. To succeed in the compensation, claim for loss of goods, the tenant must satisfy the tribunal that there is a breach of section 63 of the Act. For ease of reference, the section is set out below: RESIDENTIAL TENANCIES ACT 2010 - SECT 63 Landlord's general obligation 63 Landlord's general obligation (1) A landlord must provide and maintain the residential premises in a reasonable state of repair, having regard to the age of, rent payable for and prospective life of the premises. (2) A landlord's obligation to provide and maintain the residential premises in a reasonable state of repair applies even though the tenant had notice of the state of disrepair before entering into occupation of the residential premises. (3) A landlord is not in breach of the obligation to provide and maintain the residential premises in a reasonable state of repair if the state of disrepair is caused by the tenant's breach of this Part. (4) This section is a term of every residential tenancy agreement.

The background and evidence

1. The parties entered into a 12-month Residential Tenancy Agreement for premises located at Parramatta. The lease commenced on 19 June 2018, and ended on 18 June 2019.
2. On or about 11 February 2019, the tenant sent an e-mail to the landlord's agent, Ms He. The Tribunal recites the relevant matters therein as follows: We arrived home last night after a weekend away, and noticed really bad smell as soon as we opened the door to the apartment. At first, we thought it was coming from the drains in the bathroom, as Parramatta suffered a lot of flooding from the storm on Friday night. In an attempt to air the apartment out, I went into the main bedroom to open the window and noticed that the carpet was soaking wet. I double checked and the window was completely closed which I knew was the case as we had been using air conditioning every day during the heat. There does not appear to be any water damage indicating leaks from the walls or the ceiling. I checked the en-suite to see if the water had come through the drains, however the bath mat covers the drains and this was no wet or damp at all. You can see there is water damage to the furniture in the room - the feet of the bedroom, a cube shelving system and tallboy this is not so much. I also had two bags on the floor, which were photographed below - the pink one and the white one next to it, my laptop bag. You can see how wet they were as the pink from the duffle bag had rubbed off from the laptop bag. My laptop was inside the bag and was also completely wet. I have not checked whether it works as yet as I do not want to plug it in until I am sure the cords are completely dry.
3. The e-mail further said: I did notice that there was residue on the tiles in the hallway near the bedroom door - I mopped the floors before we left on Friday afternoon, so I would imagine this is from overspill of water from the bedroom.
4. This tenant's evidence is to be contrasted with that of her father, John. His evidence was that the ridging between the tiles and the carpeted services acted as a barrier of sorts to prevent the water escaping from the bedroom [into the en-suite].

Uncertainty about the water ingress source

1. The tenant commented further in the e-mail about the source of the alleged water ingress: I am not sure how the water got in but the only thing I can imagine now given there is no evidence of leaking near the windows, on the walls or the ceiling, is that it has come through the floors. There is a very foul smell in the whole apartment now and I am worried that given the carpet was so wet for several days, it may develop mould. Please advise once you know what you would like us to do.
2. The tenant's main complaint as set out in the e-mail dated 18 February 2019 was that the carpet was soaking wet upon her arrival to the unit [after being away] and there was a foul smell in the whole apartment. There was also comment made about damage to the goods left in the bedroom. The tenant speculated that the source of the water ingress was through the floor of the apartment. There had been storms in the Parramatta area prior to her arrival home.
3. Ms Misitano's father submitted evidence that nearby roads had flooded because of the storms and this may have had some role to play in the event.

Agent's actions post receipt of the e-mail

1. Ms He said that she asked the tenant the usual questions about the possible cause of what appeared to be an ingress of water confined to the master bedroom of the unit. The tenant had been away for some of the days prior to the "water ingress" event ["the event"] and there was evidence that during this period that there had been heavy rainfall in the Parramatta region.
2. Ms He said that the tenant denied she had left any windows open in the 7th floor apartment nor had any taps leaked from the adjoining en-suite area that might have been responsible for the event.
3. Ms He said that shortly thereafter, by e-mail sent on 18 March 2019, she contacted the building services manager, Krishna. Somewhat belatedly, Krishna provided Ms He with a response to her enquires about the possible cause and effect of the event. The substance of Ms He's e-mail and Krishna's response sent on or around 3 April 2019, is set out in the following terms: Hi Krishna, There was a big storm in February and our tenant for the subject property reported to us, the water damages to the carpet in their master bedroom. I noticed you had inspected the property at the time upon our request to the strata manager, please kindly provide the following information, at your earliest convenience: Which day did you inspect the property? Response Can't remember the exact day but it is after the storm when I receive call. How serious the carpet of the room is damaged by the water, please kindly briefly describe what you see in your inspection: Response According to my observation, I didn't find any water on the carpet, but in some places, I found a little bit of water but not much just a damp of water. Did you see any mould inside the master bedroom? Response I think it is not master bedroom, it's a guest room. No source of mould and all the edges are clear, no source of mould and no source of water damage. Does this apartment have any building leaking issues as far as you are aware? Response No
4. Although Ms He had not heard from the building manager until 3 April 2019, Ms He received an e-mail from the tenant on 18 February 2019 wherein the tenant remarked as follows: the carpet is dry and does not smell.
5. Accordingly, Ms He took no further action given the tenant's response around 18 February 2019. Despite what appeared to be an event of almost cataclysmic proportions affecting the entire master bedroom, within a week or so, the carpet was dry and did not smell. The tenant made further comment that the result was achieved without the use of any drying or airing apparatus.

The evidence

1. Based on the tenant's e-mail dated 18 February 2019, supported by the somewhat belated, though contemporaneous report from Krishna, the building manager said that: there is no evidence to support a finding that there had been a water ingress event at the unit resulting in the degree of damage to the carpet or the goods had occurred in the apartment.
2. Notwithstanding the comment in the tenant's email dated 18 February 2019, that the carpet was dry and did not smell, on 26 February 2019, the tenant sent a further e-mail to the agent alerting Ms He to some concerns she had about mould. The e-mail was in the following terms: Hi Helen, I hope you have a good weekend. I was wondering if you had heard anything more about the carpet in my apartment. I have tried calling the building manager over and over again and he won't give me any answers just keeps telling me he has to talk to the builder. Today he is not answering my call at all. The carpet is now dry and does not smell anymore as my partner removed the block on the window last week so we could open it all the way up to let fresh air in. I am not sure if this will be sufficient but I guess there is a chance there will end up being mould under the carpet if it is not cleaned properly, especially underneath where the furniture is. I was wondering if you have heard anything more from the building or strata managers.
3. The tenant relied upon a series of photos, allegedly taken over the period from 26 February to sometime in April. The photos depicted emerging dark patches on a small cabinet, allegedly mould emerging because of the flooding event. The tribunal noted that the floor covering near the alleged damaged goods looked somewhat different from the carpet in the master bedroom depicted in other photographs relied upon as part of the tenant's evidence.
4. As to the goods allegedly damaged because of the water ingress, the tenant's father gave evidence that the goods were not removed from the master bedroom after the event. The e-mail from the tenant on 18 February lends support to that position.

Mitigation

1. Clause 36 of the residential tenancy agreement provides a contractual obligation to mitigate any loss. If there was a finding in the tenant's favour, a discounting factor may apply.

Further e-mail

1. In around 8 March 2019, the tenant sent a further e-mail to Ms He wherein she expressed her growing concerns about the mould issue in the apartment. The substance of the e-mail is set out in the following terms. Hi Victoria As per advised to you previously, tenant can vacate the property within fixed term lease if the property is proved to be unliveable. Your property might not be the case. We have email records showing we responded to the matter very promptly each time you sent us the email regarding the matter, it was strata management who delay [sic] the action. As this is a strata manager, we have to wait for strata management's action. I believe you would also appreciate that owner has even decided to take action to replace the carpet and clean up the mould on their expense without waiting for the strata management. The quotation has been booked today which means the new carpet can be in place soon. At this stage, owner doesn't think it fair for you to early terminate the fixed term lease without penalty. However, they are happy to $40 per week rental deduction starting from 8-02-2019 until the new carpet is in place for a good faith.
2. In around 15 March 2019, the landlord, Ms He, the tenant and a mould cleaning tradesperson attended the unit for an inspection. The tribunal remarked that the first inspection occurred somewhat belatedly. Ms He's evidence was that she had sent an e-mail to the tenant on 11 March 2019, seeking access for an inspection to suit her convenience.
3. However, given that the tenant had advised Ms He that the carpet was dry and that there was no smell, [by 18 February 2019] it seems plausible that there was no sense of urgency about the inspection. Ms He's e-mail sent to the tenant on 15 March 2019, is in the following terms: The trade person confirmed me this morning that he didn't see any mould on the walls and the skirting board, therefore there is no need to do moulding cleaning. If by the time they rip off the current carpet and find mould on the floor, they will clean up the mould before put on the new carpet. …..we would like to friendly advise you that since our trade person has confirmed that there is no mould issue inside the room, you will be liable for the early termination penalty if you decide to terminate your lease early.
4. At the inspection on 15 March 2019, there were no findings to support a need for any "moulding" cleaning. Ms He suggested that if there was a need to rip up the carpet, they will clean up the mould before put on new carpet
5. The tribunal notes that the landlord had arranged for a measure and quote for replacement carpet in around 9 March 2019, prior to any formal inspection of the alleged flooding event being conducted by Ms He, the landlord, the tenant and the mould cleaning tradesperson. Carpet Court provided a quote for the replacement of the carpet, at the landlord's direction.
6. Ms He's evidence was that a new tenant was found for the premises, without the need to replace the carpet.

Medical report

1. A medical practitioner provided some evidence around this time that the tenant suffered from asthma and suggested that a mouldy environment may exacerbate the condition.

Further e-mail exchanges

1. Ms He then forwarded another e-mail to the tenant on Tuesday, 19 March 2019, drawn in the following terms: Hi Victoria, Regarding your request being submitted to Tribunal, landlord has instructed us to pass on her decisions for your reference: If you really want to vacate the property before fixed term expiry date, you can vacate when you find your next renting property by providing 3 weeks' notice and provided you allow us to start marketing the property as soon as possible, in which case landlord will waive your early termination penalty; Since the master bedroom is liveable according to today's inspection, landlord will not offer you the rental deduction. If you don't like the above owner's proposal, then they will respect your decision by attending the Tribunal Hearing. Please let us know your decision at your earliest convenience.

Notice to vacate the premises

1. On 20 March 2019, the tenant sent a further e-mail to Ms He in the following terms: I am writing to provide you with notice of my intention to terminate my lease on the above property early due to the health concerns following flooding to the master bedroom of the apartment during a storm on 8 February. As you are aware, the carpet covering the entire bedroom was soaked and took quite some time to dry out [cf the tenant's email dated 18 February 2019]. It has now been 4 weeks since the flooding occurred and as it has been left this long, mould has been developing and spreading, causing damage to my personal property - furniture and opposing health risks to myself and my partner. I first noticed this mould two weeks ago and brought it to your attention the next business day (26 February) via email. The date of termination will be 26 April 2019. Please confirm as per your advice during our telephone call on Tuesday, 5 March that there will be no penalty incurred for breaking the lease early as this is due to health risk. Could you also please confirm what rent is owing up until that date.
2. A subsequent e-mail from the tenant addressed to Ms He confirmed that position: I will be vacating on the date indicated in my notice - by the 26th April (I will possibly hand keys back earlier however would like the lease to go that date). We are going to move to Brisbane and so have now coordinated with my work to have the move that week. I just paid another two weeks rent last night, so that should have us paid up until 12-4-19, so that will leave exactly two weeks rent left to pay up to 26 April. I just want to confirm, with the open houses - you mentioned they will commence next Saturday. Could you please confirm if that is 30/3/19? Thanks Helen.

The findings of the building inspection report that Ms He received post the vacate date

1. At the behest of the landlord, Doina Pty Limited inspected the premises and prepared a report of its findings dated 7 May 2019. The observations and conclusions from the structural and site engineer are in the following terms: There is no visible stain mark representing previous dampness on carpet but not visual signs of current dampness or moulding. The concrete floor is completely dry and there was no sign of water leaking or moulding. There is no sign of deterioration on the carpet strip due to presence of water and there is no sign of moulding. There is no evidence to show water penetrated through the wall or window frame. There are no water stain marks visible on walls under or around window opening. There is some mention in the photographic evidence of some prior damping in the corner of the master bedroom that appeared to be located near the opening of the window.
2. The report further commented that there was a minor gap at the window though there was no visible sign of water penetration. The corner of the window frame where the minor gap was observed was distant from the window opening.

The cross-claim - matters for consideration

1. In the landlord's cross-claim filed on 26 April 2019, Ms He seeks an order that the tenant pays a "break lease" fee for early termination of the residential tenancy agreement during a fixed term. Clause 41 of the lease provides that if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break lease fee of 4 weeks, in the second half of the lease term.
2. After receipt of the findings of the building report dated 7 May 2019, Ms He proposed to resile from the position set out in her e-mail sent to the tenant dated 19 March 2019. Ms He's offer on behalf of the landlord was in the following terms: If you really want to vacate the property before fixed term expiry date, you can vacate when you find your next renting property by providing 3 weeks' notice and provided you allow us to start marketing the property as soon as possible, in which case landlord will waive your early termination penalty. Since the master bedroom is liveable according to today's inspection, landlord will not offer you the rental deduction.
3. However, the terms of the offer made on 19 March were founded upon a consensus to the effect: the room was liveable as at the date of the inspection. Notwithstanding this, and from Ms He's evidence, as a matter of commerciality, Ms He made the offer on the basis: if you really want to vacate.
4. The tenant appeared eager to accept those terms. There appeared to be work opportunities in Brisbane for the tenant and her partner that arose around the time of the discussions about her vacating prior to the end of the fixed term.
5. Ms He altered her position and wished to rely upon the contractual provisions of the lease if the tenant left the premises before the end of the fixed term.
6. In Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7, the High Court considered whether such a departure from the contractual provision, created by estoppel may be imposed irrespective of a contractual obligation that was supported by consideration. The tribunal recites the relevant part of the decision where Mason CJ and Wilson J said: But there are differences between a contract and an equity created by estoppel. A contractual obligation is created by the agreement of the parties; an equity created by estoppel may be imposed irrespective of any agreement by the party bound. A contractual obligation must be supported by consideration; an equity created by estoppel need not be supported by what is, strictly speaking, consideration. The measure of a contractual obligation depends on the terms of the contract and the circumstances to which it applies; the measure of an equity created by estoppel varies according to what is necessary to prevent detriment resulting from unconscionable conduct.
7. Ms He's use of the words: "if you really want to vacate" are by no means suggestive that the offer was predicated on the basis that there was a finding that the landlord was in breach, or that the bedroom was otherwise unliveable. At the hearing, Ms He conceded the commerciality of doing so, even if the tenant was relieved of any obligation to pay any early termination penalty.

Findings

1. The tribunal finds that the tenant would suffer detriment if Ms He resiled from the arrangement to "waive" the break lease fee if the tenant left the premises prior to the end of a fixed term.
2. The tenant is entitled to receive the whole of the bond.

Tribunal comment

1. The tribunal remarked that neither the tenant nor the tenant's partner, provided any statement about the flooding event, the subject of the claim.
2. The tenant nominated her father as a representative to appear before the tribunal. The tenant's father had orchestrated all the documents and was the author of the limited narrative that accompanied the photographs. For the greater part, the tribunal relied upon contemporaneous e-mail exchanges between the landlord's agent and tenant, as the best evidence available.
3. The father conceded that his daughter was under no legal disability. In those circumstances, the tribunal was entitled to draw an adverse inference aligned with the principals enunciated in Jones v Dunkel [1959] HCA 8. The rule was reiterated in the Court of Appeal decision in RHG Mortgage Ltd v Ianni [2015] NSWCA 56: where an uncalled witness is a person presumably able to put the true complexion on the facts relied on by a party as the ground for any inference favourable to that party. The three conditions to be applied are: first, whether the uncalled witness would be expected to be called by one party rather than the other; secondly, whether his or her evidence would elucidate the matter; thirdly, whether his or her absence is unexplained.

Summary of findings

1. Ms He had not inspected the premises until around 15 March 2019. She had taken no further action after the alleged "flooding" event perhaps comforted by the tenant's email of 18 February 2019, wherein the tenant said words to the effect: "the carpet was dry and there was no smell". The tenant's own evidence suggests that the room was liveable within a short time after the alleged flooding event on 11 February 2019.
2. The findings of the building manager, followed up somewhat belatedly by Ms He, shares that view. Part of his response is set out below: How serious the carpet of the room is damaged by the water, please kindly briefly describe what you see in your inspection: Response According to my observation, I didn't find any water on the carpet, but in some places, I found a little bit of water but not much just a damp of water. Did you see any mould inside the master bedroom? Response I think it is not master bedroom, it's a guest room. No source of mould and all the edges are clear, no source of mould and no source of water damage. Does this apartment have any building leaking issues as far as you are aware? Response No
3. The tenant departs from comments made in her earlier e-mail and in around March 2019, says words to the effect: As you are aware, the carpet covering the entire bedroom was soaked and took quite some time to dry out [cf the tenant's email dated 18 February 2019].
4. The tenant speculated that: I am not sure how the water got in but the only thing I can imagine now given there is no evidence of leaking near the windows, on the walls or the ceiling, is that it has come through the floors.
5. Ms He's evidence in around 15 March 2019, after conducting an inspection of the unit in the company of the landlord, the tenant and the mould cleaning expert, was that the master bedroom, the subject of the alleged flooding event, was liveable.
6. The observations and conclusions from the structural and site engineer in May 2019, are in the following terms: There is no visible stain mark representing previous dampness on carpet but not visual signs of current dampness or moulding. The concrete floor is completely dry and there was no sign of water leaking or moulding. There is no sign of deterioration on the carpet strip due to presence of water and there is no sign of moulding. There is no evidence to show water penetrated through the wall or window frame. There are no water stain marks visible on walls under or around window opening. There is some mention in the photographic evidence of some prior damping in the corner of the master bedroom that appeared to be located near the opening of the window.
7. From the independent evidence available, the tribunal is not satisfied that the premises were unliveable, in part, to make any award for a reduction in rent.
8. As to any claim for compensation for loss of goods, the tenant on its own evidence must fail. The tribunal makes a finding that there is no evidence of water ingress in the unit occasioned by any landlord breach of its obligations to repair and maintain the premises.
9. The tenant's speculation of the water ingress rising from the floor of the unit was not consistent with the findings in the building report in early May. There is no visible stain mark representing previous dampness on carpet but not visual signs of current dampness or moulding. The concrete floor is completely dry and there was no sign of water leaking or moulding.

Order

1. In proceedings RT 19/19461, the tribunal makes the following order: The landlord's application for the release of the bond is dismissed. The RBB is directed to pay the whole of the bond to the tenant, Victoria Misitano.
2. In proceedings RT 19/17314, the tribunal makes the following order: The tenant's application for abatement of rent and compensation for loss of goods is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 March 2022